By now you’ve heard rumblings about Blockchain -- the shared ledger concept that underlies Bitcoin – and how it’s going to change the world. You may have read an article or two and have the basic terminology and concepts rolling around your head. Or you might be asking: Block? Huh? Chain? Huh? Distributed Ledger? Centralized Ledger? Digital Tokens? Smart Contract? Mining? Like you, I’m just beginning my blockchain odyssey; I’ll be offering more observations in future articles.
What’s crystal clear is that blockchain will be game changing, disruptive technology. It will impact industries, jobs (maybe your job), traditional transaction protocols, computing systems, security and trust networks. Blockchain will transform traditional business “ledgers” into tools to record, enable and secure an enormous range of transactions. The basic blockchain approach can be modified to incorporate rules, smart contracts, digital signatures, auto-executing code, and an array of other new tools – the technical capabilities are in their infancy, much like TCP/IP gave rise to Internet v1.0, we’ll have to wait and see how blockchain continues to evolve.
Initially, blockchain will be used to lower transaction costs – this could be eliminating clearinghouses, simplifying authentication, automating verification (delivery, transfer, etc.), and in many other ways. When transaction costs drop past invisible thresholds, there will be sudden, dramatic, hard-to-predict aggregations and dis-aggregations of existing business models.
The aim of bitcoin was to be decentralized, i.e. not have a point of control, and to be relatively anonymous; this design concept inflicted complexity and cost into the process - not all blockchain ecosystems need to have the same mechanisms, especially if participants can be identified and trusted to behave.
Of particular note, there are dozens of governments entities undertaking blockchain effort – from an all-out push by Dubai to a single use like land titles in Georgia. Use of blockchain may be a lynchpin for governments who are serious about reducing fraud and corruption within their ranks, which may well be a driving force behind their blockchain efforts.
Below are a sampling of both vendors and organizations that are committed to blockchain; it shows that blockchain technologies are here to stay and will become a part of our everyday life – whether we know it or not.
Organizations leveraging blockchain
- Dubai is planning to use blockchain as the basis for its economy, further enhancing this status. Blockchain has the potential to simplify record-keeping and the transport of goods all over the world. “We have a very clear objective to make Dubai the capital of the blockchain industry,” Ms. Aisha Bin Bishr, director general of Smart Dubai, a government office charged with facilitating innovation tells WSJ. “By 2020 we’ll have 100% of applicable government services and transactions happen on blockchain.” http://www.smartdubai.ae/dubai_blockchain.php
- Estonian government has been experimenting with distributed ledger technology for a number of years using a form of distributed ledger technology known as Keyless Signature Infrastructure (KSI), developed by an Estonian company, Guardtime. KSI allows citizens to verify the integrity of their records on government databases. It also appears to make it impossible for privileged insiders to perform illegal acts inside the government networks. This ability to assure citizens that their data are held securely and accurately has helped Estonia to launch digital services such as e-Business Register and e-Tax.
- In Russ Stalter’s session at DSF2017, he asked which of the attendees were actively assessing blockchain. All of the financial institutions had active skunkworks projects (four) and two others indicated active assessment for specific purposes. In 2016 Fortune predicted that 15% of banks will be using blockchain applications by the end of 2017 – that may have been ambitious but given the cost of clearinghouses like Swift it is also inevitable. Bank of America, JPMorgan, the New York Stock Exchange, Fidelity Investments, and Standard Chartered are testing blockchain technology as a replacement for paper-based and manual transaction processing in such areas as trade finance, foreign exchange, cross-border settlement, and securities settlement.
- Republic of Georgia was the first to conduct land titles using blockchain.
- Australia is working on standards
Vendors committed to blockchain
Ethereum.org Ethereum is software running on a network of computers that ensures that data and small computer programs called smart contracts are replicated and processed on all the computers on the network, without a central coordinator. The vision is to create an unstoppable censorship-resistant self-sustaining, decentralised world computer. The official website is https://www.ethereum.org which built little computer programs directly into blockchain that allowed financial instruments, like loans or bonds, to be represented, rather than only the cash-like tokens of the bitcoin. The ethereum smart contract platform has hundreds of projects headed toward the market.
Stellar.org A nonprofit that aims to bring affordable financial services, including banking, micropayments, and remittances, to people who’ve never had access to them.
Corda DLT (corda.net) The financial grade distributed ledger that operates in strict privacy in an open, global network.
Chain Chain Core is enterprise-grade blockchain infrastructure that enables organizations to build better financial services from the ground up.
IBM Leveraging Hyperledger Fabric v1.0, an open source, cross-industry blockchain technology.
Accenture, PwC, Deloitte, and every other major consulting firm have created blockchain practices.
Hopefully, this sampling of organizations and vendors embracing blockchain answers the question “why should I care”. I’ll be continuing this discussion with specific examples in future articles.
Sources used for this article include
“Distributed Ledger Technology: beyond block chain.” A report by the UK Government Chief Scientific Adviser.
“A Brief History of Blockchain.” Vinay Gupta. Harvard Business Review
“The Truth About Blockchain.” Marco Iansiti and Karim R. Lakhani. Harvard Business Review
“Thoughts on blockchain technology: A gentle introduction to Blockchain Technology.” Anthony Lewis. Bitsonblock.net
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